In 2009, Rocksteady Studios wrote itself into gaming industry lore by becoming the first video games developer to make a game featuring Batman which wasn't absolutely dreadful. Batman: Arkham Asylum is the game which finally did justice to the caped crusader. This is because, Rocksteady didn't just use Batman as the skin for an avatar in a beat-'em-up or side-scrolling platformer. Instead, the London-based developer built a gameplay experience based entirely around the strengths and weaknesses of Batman as a character.

Players were offered a multifaceted experience which mixed in brutal combat, puzzle solving and heaps of situations involving gadgets and weapons. While players felt empowered, Rocksteady also tempered the gameplay by including Batman's vulnerabilities – at one stage, the game even offered a disturbing peak into the mind of the man behind the mask. It all added up to the best Batman title ever made; Arkham Asylum sold millions of units, bagged masses of critical acclaim and even won a couple of awards – including the Bafta for best video game.

Of course, the game's success meant that a sequel was inevitable and it wasn't long before a trailer popped up online for Batman: Arkham City. Since its first reveal in 2010, details have been sketchy. Anyone following the drip-feed of information will know that Hugo Strange has been confirmed as an antagonist, as has the Joker (Arkham City will reportedly be Mark Hamil's last turn as the character). But perhaps the biggest question that hangs over Arkham City is, 'how will Rocksteady be able to top the greatest Batman game ever made?'

Well, if the preview I was shown at X11 in San Francisco last week is anything to go by, the answer is: 'easily'. Batman Arkham City leaves one with the impression that Rocksteady might have managed to go one better on Arkham Asylum and they've done it by building on the strengths of their first Batman title while keeping everything that fans loved about it.

Our first-look begins with the basics of the plot being revealed by Rocksteady's representative, Dax Ginn. Crime in Gotham City is out of control and both Arkham Asylum and Black Water prison have been emptied and shut down. The mayor of Gotham has walled off a section of the city, imprisoned all of Gotham's psychopaths and ne'er-do-wells in it and handed over control of this new "Arkham City" to a shady individual called Hugo Strange. There's only one rule in Arkham City: if you try to escape, you will be shot dead by the guards. Beyond that, anything goes.

Naturally, allowing the city's most malevolent villains to roam free in an enclosed space has lead to its own set of problems. A turf war has erupted between the Joker and Two-Face with both vying for control of Arkham City. As the demo begins we're told Two-Face is about to execute the recently captured Catwoman as a show of strength to the rest of Arkham City's inmates, and Batman is heading into the prison to stop him.

Dax Ginn kicks off the demo with Batman staring out over the rooftops of Gotham's new super-prison. Ginn tells us that the environment in this game is substantially larger than that of Arkham Asylum and the game will take place predominantly outside. As you might expect, Rocksteady's Gotham City is a dark and forbidding place; neon-signs rub shoulders with Gothic gargoyles while searchlights blaze accusingly against the dark clouds that shroud the rooftops. Batman navigates his way around this concrete jungle by gliding through the streets or using his grappling-hook gun to rappel up to rooftops.

As he swings through the city, the Dark Knight can also listen in on conversations in nearby buildings or on the police band. It's while he's doing the latter that he discovers that Strange knows that Two-Face has Catwoman trussed up at his headquarters – a broken down courthouse – and that he plans to kill her. Batman hears Strange chuckle on the line and tell his guards to stand-down.

On his way to the courthouse, Ginn has Batman detour slightly to give us journos a look at some of the game's extra content. First stop involves saving a nosy reporter, Jack Ryder, who's run afoul of four of Two-Face's henchmen. By switching to Detective Vision – which, once again tints the screen blue and highlights items of interest – Batman's able to suss out that one of the three goons is in an informant; while his three compatriots are rendered in orange, the snitch is rendered in green, indicating he's actually in league with the Riddler. When Batman attacks, Ginn takes care not to knock the double-agent out, so he can interrogate him for information after the fight. This leads to Batman finding out that the Riddler has left some data in a mantrap on a nearby roof – apparently, as in Arkham Asylum, the Riddler will be leaving collectable items dotted around Arkham City with flesh out the plot and unlock content.

Once Ryder's been saved, Batman heads into Two-Face's headquarters to find the villain on a stage in front of a crowd of baying thugs. He's in the process of deciding Catwoman's fate, true to form, on a coin toss. The character's are faithful to comic source material; Two-Face is just the right combination of stoicism and menace, while Catwoman is confident and flirty – even when she's trussed up and hanging from the ceiling by her feet.

With just seconds to save her, Ginn has Batman switch to Detective Vision again, which not only reveals the position of his enemies, but what they're armed with. A quick scan of the area reveals one goon in the crowd is armed with a machete and another is perched above the mob with a machine gun. Since those two represent the two most lethal threats in the room, Ginn has Batman immobilise them first; the gunman is taken down silently and then Batman swoops down on the mob, knocking out the machete-wielding goon first.

After a brief punch-up in which Ginn demonstrates that the flowing, stylish hand-to-hand combat from Arkham Asylum is still present and correct, Batman and Catwoman overpower Two-Face and string him up from the ceiling. Batman then saves Catwoman a second time; he spots the dot from a laser-sight on her shoulder and pulls her out of the way just as a bullet cracks through the windows behind her. The demented laughter that rings out in the wake of the shot identifies the Catwoman's would-be assassin as the Joker.

Ginn uses this moment to demonstrate the puzzle solving element of the game. He switches to Detective Vision and uses Batman's cryptographic sequencer – a kind of all purpose gadget for problem solving – to find the bullet-hole in the window and the part of the floor in which the bullet itself was embedded. He then calculates the trajectory to find the building from which it was fired – in this case, it turns out to be the bell tower of a church in the distance. Ginn has Batman rappel onto the skids of a passing helicopter and hitch a ride to his destination.

Outside the church, Batman comes up against an armoured thug capable of blocking his regular melee attacks, so Ginn shows us a couple of the caped crusader's new moves. First, he uses Batman's cape to disorient the thug, then he initiates a 'beat-down' attack, which is essentially a flurry of punches and kicks which renders the thug unconscious.

Once inside the church, Batman runs into Harley Quinn, flanked by four gunmen. It seems the Joker's in the bell tower and according to Quinn, he doesn't want to be disturbed. She tasks the goons with keeping and eye on Batman and leaves to cause mischief elsewhere. Ginn points out that the church is also filled with hostages, so Batman is going to have to be careful in his approach to taking out the four gunmen.

Ginn accomplishes this by having Batman use a new weapon in his arsenal, a smoke bomb, and takes out two of them while they're momentarily blinded. Then he rappels up into the rafters of the church while his remaining adversaries recover. One grabs a hostage and takes cover in one of the church's confessionals, while the other trains his gun on the remaining hostages. Ginn dispatches the first one with an aerial takedown, but he's got something special in store for the second. Switching to Detective Vision, Ginn shows us all the position of the gunman in relation to the hostage inside the confessional. He then positions Batman behind the confessional, and has him punch through its wooden wall and knock out the goon before he can do any damage. With all the gunmen dealt with, it's off to the bell tower to confront the Joker.

Except he's not there. Instead, upon entering the bell tower, Batman finds a gun positioned by the window with a remote control antennae on the top and the rest of the room filled with gasoline tanks attached to sticks of dynamite. The Joker giggles through a one-way radio that the timers on the bombs have seconds to go. Before the room explodes, Ginn has Batman leap from the window and plummet towards the street. Just before he hits the ground, Ginn has Batman open his cap and glide to safety and the bell tower turns into a ball of fire behind him. Batman hits the ground and ...

"That's the end of the demo, guys," says Ginn, smiling as his announcement is greeted with a chorus of disappointed groans from the journalists in the audience. He knows that we all wanted to see more of Rocksteady's fantastic new game, more of Gotham City and more of what the Dark Knight faces in his newest adventure. We always knew Batman: Arkham City was going to be good, we just didn't know it was going to be this good and now the wait until it's released later this year will feel like an eternity.